By Nam Hyun-woo
Renault Samsung and GM Korea are desperate to secure new model production orders from their headquarters, according to industry analysts Wednesday, as they need to assemble new cars here to boost sales and keep their plants running.
The two carmakers have brought several new models assembled abroad into the country this year, but these have largely failed to compete with locally produced vehicles, the analysts said.
They stress it is a must for the companies to manufacture cars at their local plants if they want to compete with other automakers and maintain the size of their workforces.
Renault Samsung is paying keen attention as to whether its head office will allocate new models, including the Twizy micro electric vehicle, to its plant in Busan.
"Getting new models is critical to sustaining the plant and expanding our product portfolio," a Renault Samsung official said.
"New model allocations will be made based on the group's efficiency. Though we have not been informed about new models yet, headquarters appears to be discussing this."
Renault Samsung has suffered faltering sales throughout this year. From January to October, the French carmaker's Korean unit sold 190,525 cars, down 15.1 percent from the same period last year.
To address the sluggish sales, in May Renault Samsung rolled out the Clio hatchback, which is one of Renault's best-selling models in Europe. It is manufactured in Turkey.
In order to meet domestic consumers' preference for imported cars, the Korean unit even placed Renault's emblem on it, instead of its own, but ended up selling just 3,052 in the period, far short of its monthly sales target of 1,000.
Market observers attribute the slow sales of the Clio to its uncompetitive price range ― 19.9 million won to 23.2 million won depending on trim.
"Since the Clio's release, there have been doubts over the car's success in Korea because of its price," an industry source said. "Also, it was affected by domestic consumer sentiment of not seeing the car as an imported model which they are willing to buy even at a higher price."
Another concern for Renault Samsung is the arrest of Nissan Chairman Carlos Ghosn, because Nissan's Rogue SUV accounted for 47 percent of the Korean unit's manufacturing output last year. Reportedly, Ghosn opted for Renault Samsung when Nissan was allocating the Rogue in 2014.
Since Renault Samsung's production contract for the Rogue will end next year, it is uncertain whether the company can win another production order from the Japanese carmaker.
GM Korea has already received a pledge from its headquarters on receiving new model allocations, namely a compact SUV and a crossover, but production is scheduled for after 2020, meaning it has to rely on imported models or facelifts of its existing models for the time being.
However, the company's imported vehicles are also showing sluggish sales. GM Korea released the Equinox in June, expecting the SUV to lead its recovery, but has sold only 1,047 as of October, lagging far behind the company's target of 1,000 per month. The Equinox is made in the U.S.
Upon its launch, the Equinox also faced a cloudy outlook because its price range ― 29.87 million won to 38.92 million won ― was far higher than Hyundai Motor's Santa Fe ― 28.95 million won to 36.35 million won ― and other company's SUVs.
"Both Renault Samsung and GM Korea appeared to expect their imported models to hit their stride based on successes in overseas markets, but their sales have been disappointing because of the higher prices," the source said. "Manufacturing new cars in Korea could be an urgent task for the carmakers."
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| Renault Samsung CEO Dominique Signora |
The two carmakers have brought several new models assembled abroad into the country this year, but these have largely failed to compete with locally produced vehicles, the analysts said.
They stress it is a must for the companies to manufacture cars at their local plants if they want to compete with other automakers and maintain the size of their workforces.
Renault Samsung is paying keen attention as to whether its head office will allocate new models, including the Twizy micro electric vehicle, to its plant in Busan.
"Getting new models is critical to sustaining the plant and expanding our product portfolio," a Renault Samsung official said.
"New model allocations will be made based on the group's efficiency. Though we have not been informed about new models yet, headquarters appears to be discussing this."
Renault Samsung has suffered faltering sales throughout this year. From January to October, the French carmaker's Korean unit sold 190,525 cars, down 15.1 percent from the same period last year.
To address the sluggish sales, in May Renault Samsung rolled out the Clio hatchback, which is one of Renault's best-selling models in Europe. It is manufactured in Turkey.
In order to meet domestic consumers' preference for imported cars, the Korean unit even placed Renault's emblem on it, instead of its own, but ended up selling just 3,052 in the period, far short of its monthly sales target of 1,000.
Market observers attribute the slow sales of the Clio to its uncompetitive price range ― 19.9 million won to 23.2 million won depending on trim.
"Since the Clio's release, there have been doubts over the car's success in Korea because of its price," an industry source said. "Also, it was affected by domestic consumer sentiment of not seeing the car as an imported model which they are willing to buy even at a higher price."
Another concern for Renault Samsung is the arrest of Nissan Chairman Carlos Ghosn, because Nissan's Rogue SUV accounted for 47 percent of the Korean unit's manufacturing output last year. Reportedly, Ghosn opted for Renault Samsung when Nissan was allocating the Rogue in 2014.
Since Renault Samsung's production contract for the Rogue will end next year, it is uncertain whether the company can win another production order from the Japanese carmaker.
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| GM Korea CEO Kaher Kazem |
However, the company's imported vehicles are also showing sluggish sales. GM Korea released the Equinox in June, expecting the SUV to lead its recovery, but has sold only 1,047 as of October, lagging far behind the company's target of 1,000 per month. The Equinox is made in the U.S.
Upon its launch, the Equinox also faced a cloudy outlook because its price range ― 29.87 million won to 38.92 million won ― was far higher than Hyundai Motor's Santa Fe ― 28.95 million won to 36.35 million won ― and other company's SUVs.
"Both Renault Samsung and GM Korea appeared to expect their imported models to hit their stride based on successes in overseas markets, but their sales have been disappointing because of the higher prices," the source said. "Manufacturing new cars in Korea could be an urgent task for the carmakers."
